One in three people have no money saved

October 31 is World Savings Day. However, a third of people in the Nordic countries have no or very little money saved for unforeseen expenses. This is shown in a survey we at Alektum Group have conducted.

Having an emergency fund is a cornerstone of a healthy and stable personal economy. However, a survey conducted by Norstat on behalf of Alektum Group shows that an average of 29 per cent of residents in Sweden, Norway and Denmark have no or very little money saved for unforeseen expenses. A recent Ipsos study also shows that 29 per cent of Europeans state that they currently live in a precarious financial situation where an unexpected expense could tip the balance.

“Having an emergency fund is so incredibly important. You never know when your car will break down or a tooth breaks. It is also important if you suddenly have to go on sick leave or become unemployed. In an instance, you can be left with bills you cannot pay, and as a debt collection company, we see how easy it is to end up in a vicious spiral where one unpaid debt suddenly grows into several,” says Moa Tyborn, Chief Communications and Marketing Officer at Alektum Group.

One of the best insurance policies

Despite the fact that the majority of people has an emergency fund, the consequences for the group that has no saved money can be great both on a societal and an individual level. Today, it is not uncommon for people to seek out expensive quick loans to be able to pay the original expense, but then the costs risk growing rapidly and leading to even more expenses.

“An emergency fund is one of the best insurance policies you can have to avoid falling into over-indebtedness. It means that you don’t have to borrow for unexpected expenses,” says Moa Tyborn.

How big should an emergency fund be?

The size of your emergency fund should be adapted to your individual situation. Do you have children? Do you live in a house? Are you single? The most important thing is to have enough money saved for potential financial crises when they occur.

“A good rule of thumb is to have two to three months’ salary tucked away, but of course it depends on your specific situation. Try to save regularly, every time the salary comes in. Even if you can only afford to put aside a small amount each month, you will be grateful for that money the day you need it,” says Moa Tyborn.

Tips for getting started with your emergency savings

1. Create a special emergency account to make it clear to yourself that it is not an account that should be used in everyday life.
2. Set up an automatic transfer to your emergency account as soon as your salary arrives each month. It should be as natural as paying the rent.
3. Try to aim to save up for two to three months’ salary after tax. Does it feel too big? Set milestones along the way and you will keep your motivation alive.
4. Do you feel like you cannot afford to save? Start small. Put aside a small sum each month. Everything counts and the day you need the money, you will be so glad you started.